Massive Credit Offtake By Infrastructure Sector In Last 2 Years

New Delhi: Led by roads and ports, power and telecom sectors, credit disbursement by banks to the infrastructure sector has increased in the last two years at 43 per cent and 36 per cent, respectively, according to industry chamber Assocham. The chamber carried a study covering financial years 2000 to 2007 on sectors such as iron and steel, construction, petroleum, power, telecommunication, roads and ports. The study disclosed that compounded growth in credit disbursement has been highest in the power sector at the rate of 58 per cent, followed by roads and ports at 46 per cent. Credit allocation to the telecommunication sector has grown at the rate of 34.4 per cent.

Even as immense investment of $384 billion is needed to enhance the infrastructure sector in the Indian economy, the fast increase in the credit offtake to this sector in the last two years has fuelled the GDP growth at the record level of nine per cent in 2005-06 and 9.2 per cent in 2006-07. The amount of credit flow to the sector in the last two financial years was Rs 1,87,337 crore and Rs 2,56,056 crore compared with Rs 46,536 crore in 2000. Total non-food bank credit in 2006-07 was Rs 17,52,439 crore, of which credit expenditure to the infrastructure sector was Rs 2,56,056 crore. Over the last six years, the proportion of bank credit to the sector has increased from 10.8 per cent to 14.6 per cent.